Customers Bancorp, Inc

Good day. Thank you for standing by, and welcome to the Customer's Bank 2021 Fourth Quarter and Year-End Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press the star 1 on your telephone. Please be advised that today's conference is being recorded. In addition, if you require any further assistance, Please press the star zero. Thank you. I would now like to hand the conference over to your speaker today, Mr. David Patti, Communications Director for Customers Bank. Sir, please go ahead.

Thank you, Ludi, and good morning, everyone. Thank you for joining us for the Customer Bank Corp's Earnings Ball for the fourth quarter and year-end of 2021. The presentation deck you will see during today's webcast has been posted on the investor relations page of the bank's website at www.customersbank.com. You can access the deck by hovering over and clicking on the line earnings presentation. Our investor presentation includes important details that we will walk through on this morning's webcast. I encourage you to use, download, or print the documents. Before we begin, we would like to remind you that some of the statements we make today may be considered forward-looking. These forward-looking statements are subject to a number of risks and uncertainties that may cause actual performance results to differ materially from what is currently anticipated. Please note that these forward-looking statements speak only as of the date of this presentation, and we undertake no obligation to update these forward-looking statements in light of new information or future events except to the extent required by applicable securities laws. Please refer to our SEC filings, including our Form 10-K and Form 10-Q, for a more detailed description of the risk factors that may affect our results. Copies may be obtained from the SEC or by visiting the investor relations section of our website. Now, at this time, it's my pleasure to introduce Customers Bank Corp. Chair Jay Sabir. Jay, the audience is yours.

Thank you very much, Dave, and good morning, ladies and gentlemen. Thank you so much for joining us today and this morning for the year 2021 as well as Q4 2021 investor call. 2021, in our opinion, was a remarkable year for the company. Please join me in saluting our team members for their unwavering commitment, their dedication, their hard work in helping Customers Bank make huge, remarkable achievements. We are so proud of our team, and as you will see later in the presentation today, we've also had the privilege of attracting talent this past year or two from several very well-known, high-performing institutions. Now on to our presentation. Joining me this morning is Sam Sidhu, the Chief Executive Officer of Customers Bank, Carla Leibel, the Chief Financial Officer of Customers Bank Corp, as well as Andy Bowman, the Chief Credit Officer of Customers Bank. In 2021, we achieved record core earnings for the full year. of $343.6 million, or $10.20 per share, up 187% over full year 2020, and Q4 2021 co-learnings of $100 million, or $2.92 per share, up 83% over Q4 2020. Core EPS excluding CPP for the full year was $4.41 per share, up 90% over full year 2020, and well above our guidance of $4 for the year 2021. Our vision for growth has remained a part of our story since the beginning. As you can see in slide four, we inherited or got involved with Customers Bank back in 2010 by making personal investments of $17 million in this company, which was a problem institution at that time. In a span of 12 years, Customs Bank has grown from this $250 million problem bank into a digital-first, technology-driven financial institution with assets of approximately $20 billion, which equates to a staggering figure of about 40% and clearly puts us as a top 100 bank in the United States. On to some other accomplishments. As promised in January of 2021, we divested Bank Mobile, which became BMTX, and we are pleased that we were able to provide a special distribution of BMTX stock to our shareholders valued at approximately $75 million in Q1 2021. We are now also preparing for the expiration of the Deposit Servicing Agreement with BMTX by the end of this year. We expect that due to our success in generating considerably above average low-cost core deposits, this expiration will be accretive to our net income by about $60 million pre-tax in 2023 and beyond. We also funded in 2021, either directly or indirectly, about 256,000 PPP loans totaling $5.2 billion, bringing the total PPP loans funded to over $10 billion and to over 350,000 small businesses across America. We earned close to $350 million of deferred fees from the SBA to the PPP loans, which is significantly accrued to our earnings and capital level, as these loans are being now forgiven by the government. This initiative not only helped save over 1 million American jobs, but also would have added approximately $300 million to our common tangible equity by the middle of this year. In October 2021, we launched a blockchain-based instant payment token that immediately began serving a growing array of B2B clients who want the benefit of instant payments and generated close to $2 billion of no-cost or no-cost deposits in only 90 days. We will provide more details about this initiative in a few minutes. Now let's get on to the financial highlights. First, from the earnings perspective, I will focus on the core earnings slide six. We earned a record $2.92 in core earnings, which represented net income of $100 million, as I shared with you earlier, and that's up in 83%. This translates to a core return on common equity of 33.7%, return on average assets of 2.11, and pre-tax pre-provision ROAA of 2.67. And our margin, the interest margin, was 3.12% for the quarter. Now, moving on to the balance sheet, we ended the quarter with $16.5 billion approximately in core assets, including PPP. Our loan book was $11.3 billion at the end of the quarter. CNI was up about 45% or $1 billion. Consumer loans were up about 40% or $500 million. Commercial real estate owner-occupied was up about 18% or $83 million. Construction loans up about 41% or $58 million. as we saw some risks in the in the multi-family business so we continue to let that decline but that turned around you saw an increase in our multi-family loans in the fourth quarter and you should continue to see a much greater growth this year because we see that as a very good uh good credit quality good asset quality that's it now and we are building that pipeline Our loan pipeline overall and our backlog have grown to an all-time high level across the franchise, and we expect loan growth to continue into 2022 at a double-digit level. Total deposits This past year grew by $5.5 billion year-on-year, driven by monumental efforts from our commercial teams, amplified by our digital bank team's success in deposit gathering associated with our customers' bank Instant Token, or CBIT. And we brought in, as I shared with you earlier, about $2 billion in low-cost or no-cost deposits. Our demand deposits are up 131%. Our non-influenced BDAs were up 90%. And all this growth while maintaining excellent credit quality. Strong asset quality is at the core of our franchise, and we continue to have superior credit quality compared to the peers, with NPAs at just 25 basis points and reserves to NPLs of about 278%. I want to thank you for all your continued support, and it's amazing to think that we are just a young company and getting started in the next phase of our growth. I will now turn it over to Sam Sidhu, the President and CEO of Customers Bank, to take you through much more details. Sam?